The supreme court in its landmark judgment has said that any appeal cannot become infructuous only by cessation of identity of any appellant or respondent.
Background of the Case
Recently an order is passed by supreme court in the case of CIT, Jaipur vs M/s Gopal Shri Scrips Pvt. Ltd. (Civil Appeal No. 2922 of 2019) in an appeal filed by department against the order dated 09.08.2016 which was passed by the High Court of Rajasthan wherein high Court dismissed the appeal of income tax department as having become infructuous as the respondent being company was struck off u/s 560 of Companies Act, 1956.
High Court Says
The honorable high court has held that the name of company M/s Gopal Shri Scrips Pvt. Ltd. has been struck off from the register u/s 560(5) of the Companies Act, 1956 and the said company is dissolved. Further observed that In the light of the communication placed for our perusal dated 07.04.2011, no purpose is going to be served in examining the substantial question of law which has been raised for consideration in the instant appeal and on account of these change in circumstances, the present appeal has become infructuous and accordingly stands dismissed.
The Supreme Court Says
The later on in the appeal of department before the honorable supreme court, the court has observed that perusal of the order of high court show that the High Court was of the view that since the Company stands dissolved as a result of the order passed by the Registrar of the Companies under Section 560 (5) of the Companies Act, the appeal filed against such Company which stands dissolved does not survive for its consideration on merits. It was held by the supreme court that High Court failed to notice Section 506(5) proviso (a) of the Companies Act and further failed to notice Chapter XV of the Income Tax Act which deals with “liability in special cases” containing section 159 to 181 mainly its section 176 of Income Tax Act, 1961. These provisions provide as to how and in which manner the liability against discontinued Companies/entity arise under the Companies Act and under the Income Tax Act is required to be dealt with.
The matter remitted to High court again to consider on merits
Therefore, the High Court not decided the appeal keeping in view the aforesaid two relevant provisions, the order passed by the high court is not legally sustainable and has to be set aside.